Correlation Between GLG LIFE and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both GLG LIFE and Occidental Petroleum at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GLG LIFE and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLG LIFE TECH and Occidental Petroleum, you can compare the effects of market volatilities on GLG LIFE and Occidental Petroleum and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GLG LIFE with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and Occidental Petroleum.
Diversification Opportunities for GLG LIFE and Occidental Petroleum
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GLG and Occidental is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and GLG LIFE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GLG LIFE TECH are associated (or correlated) with Occidental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum has no effect on the direction of GLG LIFE i.e., GLG LIFE and Occidental Petroleum go up and down completely randomly.
Pair Corralation between GLG LIFE and Occidental Petroleum
Assuming the 90 days trading horizon GLG LIFE TECH is expected to generate 4.97 times more return on investment than Occidental Petroleum. However, GLG LIFE is 4.97 times more volatile than Occidental Petroleum. It trades about 0.04 of its potential returns per unit of risk. Occidental Petroleum is currently generating about -0.03 per unit of risk. If you would invest 1.75 in GLG LIFE TECH on December 2, 2024 and sell it today you would earn a total of 0.25 from holding GLG LIFE TECH or generate 14.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 99.6% |
Values | Daily Returns |
GLG LIFE TECH vs. Occidental Petroleum
Performance |
Timeline |
GLG LIFE TECH |
Occidental Petroleum |
GLG LIFE and Occidental Petroleum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GLG LIFE and Occidental Petroleum
The main advantage of trading using opposite GLG LIFE and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, Occidental Petroleum can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Occidental Petroleum will offset losses from the drop in Occidental Petroleum's long position.GLG LIFE vs. Northern Data AG | GLG LIFE vs. CALTAGIRONE EDITORE | GLG LIFE vs. Cass Information Systems | GLG LIFE vs. CHINA TONTINE WINES |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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